Why do top shops (founded by former traders) recruit into IBD rather than S&T?
Many of the founders/key people at multistrategy shops like Moore Capital, GLG, SAC, DE Shaw, Bridgewater, Citadel, and Fortress came from trading backgrounds.
Yet it seems much of the recruiting done by these funds nowadays is into IBD classes rather than S&T - any insights as to why this is happening?
Because they want a slave. They don't need someone that has the next great trade, they need someone to model out the trade they've already thought of. A lot of these bigger funds are so institutionalized that you're not really doing the shit that makes investing fun. If you really want that stereotypical HF lifestyle/ work environment, you should look at smaller funds (no guarantee they'll give it to you, but much more likely than with the names you mentioned).
Founders looking for skills they don't have.
Founders looking for skills they don't have.
Thanks Alex. When looking at smaller funds for the 'stereotypical HF work environment', does it make more sense to come from a S&T rather than IBD background considering you'll be closer to executing the actual trade?
Not true at all with the funds you mentioned. Moore is a macro fund; they recruit a lot of former S&T guys. SAC does as well, along with ex-equity research people. Bridgewater is a mixed bag; they recruit tons of undergrads and professionals of all stripes. I know ex-consultants who have gotten jobs there. DE Shaw is a quant fund, so they target brilliant math/science students from elite schools and programmers from google/microsoft/facebook. Citadel is multi-strategy, so they run the gamut from sell-side traders to ex-bankers in their global equities group and programmers in high-frequency. Fortress has IBD people in their private equity and event driven funds, but their macro drawbridge fund is composed mostly of traders.
Very insightful, thanks a lot Brady. Sseems for more macro-focused funds at least, sell-side trading experience might be relevant/helpful.
Are there particular trading desks that might be better platforms for moving to a macro fund than others? Perhaps FX/rates/commodities over distressed/credit/equities?
Definitely. For macro funds, trading experience in currencies, rates, or commodities, is by far the most common. Exotic equity derivatives can also be useful if a fund engages in volatility trades.
Agreed with the other posters.
Keep in mind, a lot of those very large shops also need a lot of support for the traders they do have--research assistants, analysts, accountants, IT, back office stuff, etc. So those positions are more suited to the finance-major, investment banking-focused undergrads.
most hedge fund type have zero respect for bankers
Brady is exactly on the point. Top corporate hedge funds (i.e. distressed, equity long/short and mergerarb, credit, etc) will tend to hire mainly bankers and equity research analysts; more macro orientated shops on the other hand will tend to hire FICC (mainly rates/FX) traders, economists, etc. I've worked in t1 funds in both areas, and thish holds true.
Many of the top macro funds will recruit some investment bankers for grinding, analyst-type work. These are like 24-25 years olds who have just completed analyst programs and they are perfect because they have good work ethic but none of the skills neccesary to actually take risk and advance into a PM role...so within about a week they will realize that and just shut up and do their work without complaining about being on the bottom of the totem pole for a long time. Higher level jobs like PMs and senior strategist-types who work with the PMs are all experienced hires (often from sell-side trading) and it is very rare for someone to move from an analyst job to anything other then a more-senior analyst without leaving the firm.
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